Asian shares slumped on Friday, while the dollar firmed after Federal Reserve chair Janet Yellen suggested the central bank is still on track to raise interest rates later this year.
MSCI’s broadest index of Asia-Pacific shares outside Japan gave up early gains and was down about 0.2%, Reuters reported.
It was on track for a weekly loss of over 4% after markets were roiled by a survey showing China’s factory activity fell to its weakest since 2009.
But financial spreadbetters expected European shares to open higher, with Britain’s FTSE 100 seen up as much as 1.2%, Germany’s DAX as much as 1.5% and France’s CAC 40 1.2%, though major indexes could still end the week with losses.
The expected opening gains in Europe are mostly due to short sellers covering positions ahead of recent lows, said Jonathan Sudaria, dealer at Capital Spreads.
“There’s nothing particularly bullish out overnight, in fact Asian markets have recommenced their sell off and Janet Yellen has soured the mood by practically confirming that a rate hike will be coming before year end,” Sudaria said in a note.
US stock futures were up about 0.4%, also suggesting calmer trading later in the global session.
Japan’s Nikkei ended a volatile session up 1.8%, but still gave up more than 1% in a holiday-shortened two-day trading week.
Yellen, speaking a week after the Fed delayed a long-anticipated rate hike, said she and other Fed policymakers do not expect recent global economic and financial market developments to significantly affect the central bank’s policy.
The euro tumbled about 0.6% to $1.11 from around $1.12 before Yellen’s speech, while the dollar was up around 0.2% at 120.32 yen, from around 120 yen.
The dollar index, which tracks the US currency against a basket of six major counterparts, was up 0.4% at 96.32.
Federal fund futures contracts for January fell to as low as 99.73 in price, pricing in more than 50% chance of a rate hike by the end of this year, before erasing losses.
Stocks around the world fell for a fifth day on Thursday, sliding towards two-year lows as worries lingered over global economic growth and as Volkswagen’s emissions test scandal rattled European carmakers.
The Brazilian real bounced back sharply after hitting a record low of 4.25 to the dollar, after the head of the Brazilian central bank vowed to use all instruments in its arsenal to curtail the real’s collapse. The real last stood at 3.93 per dollar, rising 6.1% on the day.
In commodities, crude oil futures held on to overnight gains after rising as much as one per cent after an estimate of inventory draws at a key US delivery hub. US crude was up about 1% at $45.34 a barrel, while Brent was rose 0.8% to $48.56.
